Impact Investing

September 03, 2013 - by Jeffrey Billman

As part of a venture philanthropy project, undergraduate students invest nearly $90,000 for the greater good.

James Clarke ’13, Bruno Franca, and Michael Velazquez ’13 prepare to present their case to the Community Foundation of Central Florida. (Photo by Scott Cook)
What would you do if you wanted to change the world (or at least part of it), and had the money to do so? Give it away, right? But to whom? And how could you be assured that money was being put to good use—beyond questions of fraud or impropriety, how do you know that money is being spent in a manner that plants a seed that will blossom for years and generations to come?

In other words, “What are they doing to make the world a better place?” asks Marc Sardy, associate professor of international business.

Those were the fundamental questions that underlined Sardy’s Impact Investing course during the spring semester. The course paired students with mentors to analyze local nonprofits and identify investment opportunities. Student teams assessed the nonprofits’ needs to find ways the money could be put to better use, and ultimately decide how much to invest. It’s a play, in a sense, on the old “give a man a fish” adage.

And here’s the kicker: The students were playing with real money.

A year ago, Sardy heard that a local philanthropic organization, the Community Foundation of Central Florida, was looking to partner with students on a sustainable giving project. The students would decide, assisted by their mentors, how to invest close to $90,000 in Winter Park organizations that fit certain criteria.

The course was team-taught by Sardy and two members of the Community Foundation: President and CEO Mark Brewer and Vice President of Community Investment Michele Chapin. They divided students into four groups: One group looked at organizations that help seniors; another researched emergency services organizations; a third considered arts and education organizations; and the final group assessed capacity-building.

On April 25, students presented recommendations to the Community Foundation’s board of directors in the boardroom of a law office near Lake Eola. The capacity-building group went first. They had a roughly $22,000 portfolio, which they sought to invest in the Crealde School of Art and the Winter Park Day Nursery, which provides early childhood education

Andrew Shipman ’13, Myra Macias ’14, and Dylan Parnell ’15 discuss their findings with the board. (Photo by Scott)
Crealde, they told the board, needed $15,000 to hire a part-time development assistant for a year. That assistant’s job would be to take over some of the school’s administrative roles, freeing the executive director with fundraising efforts. That additional fundraising, then, could enable the school to raise enough money to pay for the assistant going forward. The nursery, meanwhile, should receive $7,000, which would enable it to create a strategic plan to support its growth. After a brief round of questioning—“What do they hope to get with their strategic plan?”—the board unanimously signed off on both recommendations.

The second group of students, the arts and education team, also wanted to bequeath money to the nursery. But they had a larger request, $12,125, which would go toward a strategic plan, maintenance, and about 30 tablets designed for teachers to use as educational tools, as the nursery only had two working computers.

That last bit raised an eyebrow or two. “I’m not sure that $6,000 worth of tablets for two- and three-year-olds is a good investment or a good educational experience,” said a board member. “Is this what they really need?” Yes, the group replied, the tablets wouldn’t be used as a babysitting device, but rather as a way to augment the nursery’s educational services. After about 15 minutes of debate, the board unanimously agreed to the group’s recommendations, both for the nursery and $10,000 to the Albin Polasek Museum & Sculpture Garden for marketing and merchandising.

And so the meeting went, for more than an hour, as board members probed and prodded the essence of the students’ proposals and the students defended their recommendations, some more effectively than others, but all the projects were eventually approved.

They weren’t the only group giving a presentation to the Foundation board that day: A group of graduate students from the University of Central Florida went ahead of them. But the fact that they are undergraduates makes them unique, Sardy says. Not just here, but in the entire country. “I can tell you this: As far as I know, we’re one of the only undergraduate courses in the country that is doing impact investing.”